Stocks surge Tuesday by 378 points

Wednesday, October 16, 2002

By Amy Baldwin, The Associated Press

NEW YORK -- Powered by a batch of surprisingly good earnings reports, stocks barreled higher Tuesday with the Dow Jones industrials soaring more than 375 points for a four-day gain of nearly 1,000 points. The rally also gave the Dow its seventh-biggest point gain ever, and that propelled the blue chips back above 8,000.

The Dow owed some of its lift to upbeat earnings from three of its components -- Citigroup, General Motors and Johnson & Johnson.

All three of the market's major indexes scored a four-session winning streak. That's a feat the Dow and Standard & Poor's 500 index last accomplished 10 weeks ago in the period ending Aug. 9. The Nasdaq composite index hadn't had a four-day rally in five months, or since May 17.

Analysts said investors were feeling enthusiastic about the earnings reports, having been shaken up in the past few weeks as companies lowered their profit outlooks.

"We are either manically depressed about prices or irrationally exuberant. That is what we have today, swinging the other way," said Arthur Hogan, chief market analyst at Jefferies & Co.

The Dow closed up 378.28, or 4.8 percent, at 8,255.68. The Dow claimed a four-day advance of 969.41, which allowed it to close above 8,000 for the first time since Sept. 18 when it stood at 8,172.45.

The broader market was also sharply higher. The Nasdaq climbed 61.91, or 5.1 percent, to 1,282.44, gaining 168.33 in the past four sessions. The S&P rose 39.83, or 4.7 percent, to 881.27, for a four-day advance of 104.51.

Tuesday marked the first big day for companies releasing third-quarter profits. Investors were grateful for positive results after having their expectations slashed in the weeks leading up to earnings season. The buying in the previous three sessions had mostly to do with lower stock prices following six weeks of sell-offs.

Analysts were encouraged by the market's ability to forge ahead for four straight days, because recent rallies have been shorter-lived as sell-offs quickly erased gains.

"There is more of a sense of sustainability," said Larry Wachtel, market analyst at Prudential Securities.

But some profit-taking after a huge gain in such a short period of time was likely. And Intel's news after the close of trading that its profits fell 3 cents shy of analyst expectations could feed selling should investors decide to cash in some of their gains from Tuesday.